Auberge acquires Mexican

MILL VALLEY, CA— Auberge Resorts, the owner and manager of small, eclectic properties at the ultra-luxury level, has acquired Esperanza Resort, Cabo San Lucas, Mexico as part of a joint venture deal. Auberge Resorts had been operating the luxury property sited on 17 acres since it opened its doors in 2004. Partnering in the transaction with Auberge is Levy Resorts, an offshoot of Chicago-based real estate development company, the Levy Organization, which is headed by its chairman and CEO, Larry Levy, and San Francisco-based Flynn Properties, a property-development firm led by its chairman, Greg Flynn. The resort is held under Esperanza Owners, LLC. The purchase price of the hotel, which includes 56 suites, an oceanfront restaurant and other food and beverage outlets, as well as a spa, was not disclosed. The property was acquired from Esperanza Capital Partners, which included Auberge Resorts; managing partner and Aspen, CO-based Timbers Co.; and financial investor S.V. Capital of Denver. There also are 60 villas that are part of a private-residence club. Villa owners also have access to many of the hotel’s facilities, such as the spa. “From the existing ownership group we purchased all the assets of the hotel and some of the fractional interests that were unsold,” said Mark Harmon, the principal and CEO of Auberge Resorts, who acknowledged the transaction would be characterized as a multi-million dollar deal. The fractional interests are set to be sold, he added. The deal was financed via capital from the partners and a loan from Goldman Sachs. According to Harmon, Auberge and Flynn Properties both contributed to 50% of the deal, with Levy Hotels investing in the remaining 50%. Larry Levy said that he was attracted to the deal because of his first-hand knowledge of the resort. “I have been a fractional owner of Esperanza since before it was constructed, so I know the property like the back of my hand. I’ve been going there for five years and never in my life has something I was involved in exceeded my expectations by so much. It’s a fabulous place,” Levy said, noting he and members of his family have been spending approximately 10 weeks per year there. “We know it and really adore the place.” In addition to his real estate development company, Levy also is well known in hospitality circles as the founder of Levy Restaurants in 1978. Levy had plans to try and buy the resort when it came on the market, but then was approached by Auberge Resorts. Recognizing a key competitor for the property, Levy decided to work with Auberge, which already was working with Flynn Properties. “We’re really lucky to have [Flynn]. He brings tremendous value,” said Levy. Flynn did not return calls for comment. Auberge Resorts will remain the operator of the resort under a long-term management agreement. Harmon said that the acquisition is in keeping with the hotel company’s agenda. “It’s something that we’ve always attempted to do— a target on every property we’re involved with, i.e., we want to own or we want to have a significant ownership position in every property we have or we’re developing. We think this project, as all the properties we’re involved in, is a terrific investment opportunity,” he said. “We’re not passive investors,” added the CEO. “We really want to put money into the projects where we have an active role. We know there’s a tremendous amount of potential for Esperanza. We really take a long-term, patient view of our properties. We’re not into buy and sell. We want to own this property forever. So, from that point of view, we see it as a wonderful asset in our portfolio.” The company’s other high-end offerings include its flagship, Auberge du Soleil, Calistoga Ranch in California’s Napa Valley and the Inn at Palmetto Bluff in Bluffton, SC. It also recently launched a new hotel concept, Solage Hotels and Resorts, which is positioned at a price point approximately 50% lower than its existing hotels. The first